More than 63,000 projects have been funded through the online crowdfunding platform Kickstarter, for a total of more than $1.1 billion. Among these, 66 managed to raise more than $1 million, including Oculus Rift (virtual glasses), Pebble (a watch) and Pono Music (a high-quality MP3 reader). “Crowdfunding is democratising capital” by raising small amounts of money from large numbers of people, says Daniela Castrataro, Italian ambassador of the Crowdfunding Network.
Technologist: What should a start-up do for successful crowdfunding?
Daniela Castrataro: You have to be really aggressive online. The crowdfunding strategy must be at the heart of the start-up’s business model. It has to be active, communicating on a maximum number of virtual and physical platforms.
T. How do you create a successful communications campaign?
D. C. Speed is the operative concept. You can’t let more than 24 hours go by before answering a donor’s message, or they will lose interest in the project or think that the start-up is not serious. The campaign must have a face: the start-up’s founders must be involved in the project and not settle for delegating the job to an intern, which is often the case. Many entrepreneurs just describe their project in a few sentences and then expect hundreds of millions of euros to fall into their laps. It doesn’t work that way.
T. Is there a secret weapon for a successful crowdfunding campaign?
D. C. Video. Describing a project with a video radically increases its chance of success.
T. Does a campaign bring more than just money?
D. C. It creates a community around the product. Donors will validate and spread the word among their peers, which is essentially a free marketing campaign.
T. The most popular platforms in Europe, Kickstarter and Indiegogo, are American. Is this a problem for European start-ups?
D. C. You have to have a U.S. bank account, which costs time and money. In general, European platforms have less success because they have to adapt to various national regulations. On Seeder (UK) and Ulele (France), you have to register your company in every country, which is complicated and expensive.
T. Oculus Rift was recently bought by Facebook for $2 Billion, but donors who sponsored the project got nothing from the deal.
D. C. An alternative called “equity crowdfunding” lets you invest in a company and buy shares. But in Europe, only Italy has a law governing this. France and England are leery of going this route. Without legislation, companies and investors are not protected. This cannot continue.